U.S. Futures, Europe Stocks Gain as Asia Peers Dip: Markets Wrap

May 14, 2019 By News Team By News Team

U.S. equity futures rose alongside European stocks on Tuesday while shares in Asia dropped as investors assessed the prospects for global trade in the wake of a brutal start to the week for markets. Haven assets including Treasuries, gold and the yen dipped.

Contracts on the S&P 500, Dow and Nasdaq indexes all climbed after President Donald Trump predicted that talks with China will be “very successful” even as the U.S. prepares to hit the country with fresh tariffs. The Stoxx Europe 600 Index also rose, with automakers leading the gain. In Asia, shares in Shanghai posted a modest decline, while Hong Kong equities slumped as the market re-opened after a holiday. Japan’s Topix index closed down, though it pared most of an earlier decline. Ten-year Treasury yields edged higher.

The trade tussle between Washington and Beijing is keeping markets on edge, as investors fear a bigger breakdown would increase the likelihood of damage to global growth. On Monday, all three major U.S. benchmarks ended more than 2% lower — only the second time this year that’s happened — after China targeted some of the biggest U.S. exporters in response to American tariffs. The new penalties also took aim at American farmers, driving down soybean and cotton prices.

“Our expectation is that an agreement is made, but the challenge then becomes the governance of that agreement,” Liam Spillane, head of emerging-markets debt at Aviva Investors, said in an interview in Sydney. “That’s positive — global growth and global trade shouldn’t suffer too much — but we’re likely to still be in a period where we are going to get headline volatility that relates to the compliance” after any deal, he said.

Elsewhere, oil edged higher as investors weighed potential disruption to demand from the trade spat against geopolitical tension in the Middle East that threatens supply.

Here are some notable events coming up this week:

Earnings this week include Vodafone, Alibaba, Tencent, Cisco, Nvidia.New York Fed President John Williams speaks at an event in Zurich. Kansas City Fed President Esther George and Richmond Fed President Thomas Barkin also make appearances.China industrial production and retail sales are slated for Wednesday, same day as U.S. retail sales and industrial production.Bank of Indonesia has an interest rate decision on Thursday.Australian unemployment is out on Thursday.

And here are the main market moves:

Stocks

The Stoxx Europe 600 Index jumped 0.5% as of 8:14 a.m. London time, the largest climb in almost six weeks.Futures on the S&P 500 Index rose 0.5%, the biggest advance in more than a week.The U.K.’s FTSE 100 Index jumped 0.4%, the largest climb in three weeks.Germany’s DAX Index increased 0.5%.The MSCI Emerging Market Index sank 0.7%, the lowest in almost four months.The MSCI Asia Pacific Index fell 1%, the lowest in almost 16 weeks.

Currencies

The Bloomberg Dollar Spot Index rose 0.1% to the highest in more than a week.The euro climbed 0.1% to $1.1237, the strongest in more than three weeks.The British pound dipped 0.1% to $1.294, the weakest in more than two weeks.The Japanese yen sank 0.4% to 109.74 per dollar, the biggest dip in more than a month.

Bonds

The yield on 10-year Treasuries increased one basis point to 2.42%.Germany’s 10-year yield increased one basis point to -0.06%, the biggest climb in more than a week.Britain’s 10-year yield gained two basis points to 1.119%, the largest advance in more than a week.Italy’s 10-year yield dipped one basis point to 2.695%, the biggest dip in two weeks.

Commodities

West Texas Intermediate crude climbed 0.1% to $61.10 a barrel.Gold decreased 0.2% to $1,297.38 an ounce.